VPF vs PPF: Which is better

VPF vs PPF: Which is better

If you look at the interest rate offered, tenure of investment and tax implications voluntary provident fund scores over public provident fund.

Many of us have this question and want to know which is better as an investment option: VPF (Voluntary Provident Fund) or Public Provident Fund. As the name suggests both the products -- VPF and PPF are provident fund schemes.

Let's understand the two schemes in detail:

What is Voluntary Provident Fund (VPF)

Voluntary Provident Fund is voluntary contributions to the Employee Provident Fund account by the employee. It is directly linked to your EPF account. The only basic difference in VPF and EPF is, in the former employee does it voluntarily whereas in EPF contribution is mandatory.

Note: Only salaried employees have the option of Voluntary Provident Fund.

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VPF vs PPF: Which is better

Public Provident Fund (PPF) is a statutory scheme by the Central Government of India. It is one of the instruments suitable for long term investment.

PPF scheme is for a period of 15 years. The minimum investment required in a PPF account is Rs 500 per year and the maximum investment amount is Rs 70,000 per year. You can take a loan on the PPF account after completion of the third year opening of the account. Partial withdrawal is also applicable after completion of 4 years after account opening.